Former US Postal Service Mail Carrier Sentenced for Role in Stolen Identity Refund Fraud Scheme

Vernon Harrison of Montgomery, Alabama, was sentenced to 111 months in prison, three years of supervised release, and ordered to pay $82,791 restitution for his role in a stolen identity refund fraud scheme, the Justice Department's Tax Division and US Attorney for the Middle District of Alabama announced October 31.

Harrison was convicted on July 3, 2013, following a jury trial. He was found guilty of conspiracy to file false claims as well as numerous counts of mail fraud, aggravated identity theft, and embezzlement from the mail.

According to the evidence presented at the trial, Harrison was a corrupt US Postal Service mail carrier who was recruited to join a stolen identity refund fraud conspiracy. Members of the conspiracy used stolen identities to file false tax returns, which claimed fraudulent tax refunds. The returns were filed from various locations, including houses and hotels around Montgomery and Birmingham, Alabama. The tax refunds were placed on debit cards that were mailed to addresses along Harrison's postal route in Montgomery. Harrison stole the debit cards from the mail and provided them to a coconspirator in exchange for cash. During this period, Harrison stole over a hundred debit cards from the mail for his coconspirators.

At trial, federal agents showed that they had uncovered substantial evidence of the conspiracy during the execution of search warrants at locations in Montgomery and near Birmingham. This evidence included over a hundred envelopes for debit cards that had been mailed to addresses on Harrison's postal route, as well as agents' observation that Harrison failed to deliver Turbo Tax debit cards.

Source: US Department of Justice

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Former Brokerage Firm Operations Head Indicted for Tax Crimes

An indictment was unsealed October 25 charging Dominick Pannitti, formerly of North Bellmore, New York, with tax crimes, the Justice Department announced.

According to the indictment, which was returned by a grand jury on September 26, Pannitti was head of operations at a securities brokerage firm in Syosset, New York. The securities firm had an automated system designed to adjust customers' trading accounts for amounts less than $1,000. During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts hundreds of times in increments less than $1,000. Pannitti was not entitled to most of these credits, which totaled over $570,000. Pannitti concealed from his accountant the income he obtained and failed to report the income on his tax returns.

A trial date has not been scheduled. Pannitti faces a potential maximum sentence of eight years in prison and a potential fine of up to $500,000.

Source: US Department of Justice

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Indiana Physician Pleads Guilty to Failure to Pay Employment Taxes

Dr. Ronald Eugene Jamerson of Schererville, Indiana, entered a guilty plea to one count of willfully failing to truthfully account for, collect, and pay over employment taxes to the IRS, the Department of Justice and IRS announced October 25. Under the terms of the plea agreement, Jamerson also agreed to pay restitution in the amount of $541,083.20 to the IRS.

On June 20, 2012, Jamerson was indicted on eleven counts of willfully failing to file quarterly employment tax returns (forms 941) with the IRS and willfully failing to pay over to the IRS the federal income taxes and the FICA taxes due and owing from the second quarter of 2006 through the fourth tax quarter of 2008. According to the indictment and other court pleadings, Jamerson, an ear, nose, and throat surgeon who opened his own medical practice in the late 1990s, deducted and collected from his employees' paychecks federal income taxes and FICA taxes, but he failed to file the employment tax returns and related employment taxes from 2003 through 2008. In the plea agreement, Jamerson agrees that the total tax loss based on his failure to report and pay employment taxes is $541,083.20.

Sentencing is scheduled for January 24, 2014. Jamerson faces a maximum penalty of five years in prison, three years of supervised release, and a maximum fine of $250,000.

Source: US Department of Justice

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Alabama Man Pleads Guilty to His Involvement in an Identity Theft Scheme Using Stolen Prisoner Names and a Corrupt Postal Employee

Harvey James pleaded guilty to one count of mail fraud and one count of aggravated identity theft for his role in a stolen identity refund fraud (SIRF) scheme, the Justice Department and the US Attorney for the Middle District of Alabama announced October 25.

According to court documents and court proceedings, James obtained stolen identities from individuals who had access to inmate information from the Alabama Department of Corrections. For several years, James, his sister, Jacqueline Slaton, and others used those inmate names to file false federal and state tax returns. James and Slaton directed some of the false refunds to be sent to either prepaid debit cards or issued via check.

In 2012, James and Slaton enlisted the assistance of US Postal Service mail carrier Vernon Harrison in the scheme. Harrison, who provided James and his coconspirators with mailing addresses to which they could mail debit cards, retrieved the debit cards from the mail and delivered them to James and his coconspirators. In exchange, Harrison received substantial payments.

Between 2010 and 2012, James and his coconspirators filed hundreds of federal and state income tax returns that claimed over $1 million in fraudulent tax refunds.

Sentencing has not yet been scheduled. James faces a minimum sentence of two years in prison and a maximum sentence of twenty-two years in prison, three years of supervised release, restitution, and a maximum fine of $250,000. Slaton already pleaded guilty and was sentenced to seventy months in prison. In July, Harrison was found guilty by a jury for his role in the scheme. Harrison was sentenced on October 31.

The United States has sued Eric Hardaway, aka Eric Brittenum, and Yvonne Hardaway, seeking to bar them and their business, Hardaway Taxx, from preparing federal tax returns for others, the Justice Department announced October 29.

The civil injunction complaint alleges that the Hardaways, of Holly Springs, Mississippi, have prepared federal income tax returns for customers that fraudulently understated their tax liabilities or overstated refunds by claiming frivolous fuel tax credits. According to the complaint, an IRS investigation revealed that 156 income tax returns prepared by the Hardaways and audited by the IRS resulted in tax deficiencies. The lawsuit alleges that the tax harm caused by the Hardaways' misconduct exceeds $321,000 in erroneous refunds issued to taxpayers.

The Justice Department announced October 30 that Anthony Williams, a resident of Baton Rouge, Louisiana, pleaded guilty to one count of threatening to retaliate against a witness in a federal criminal tax trial.

According to court documents, Williams threatened to cause bodily injury to a witness who testified in the federal trial of United States v. Angela Myers. In his plea agreement, Williams, who is Myers' son, admitted to sending a threat via Instagram with the intent to retaliate against the witness for his testimony. In March 2013, Myers was convicted by a jury for her role in a stolen identity tax refund fraud scheme and was subsequently sentenced to serve eleven years in federal prison.

Williams faces a potential maximum sentence of twenty years in federal prison and a $250,000 fine. As part of his plea agreement, Williams also agreed to a condition of release prohibiting him from initiating any contact whatsoever with the witness he threatened.

Source: US Department of Justice

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Justice Department Seeks to Shut Down Texas Tax Preparer

The United States has filed a lawsuit asking a federal district court in McAllen, Texas, to permanently bar Hector Rangel Jr. from preparing federal tax returns for others, the Justice Department announced October 31.

According to the complaint, Rangel, who resides near and does business in McAllen, has been preparing federal tax returns for customers since 2003 that contain false, improper, or inflated itemized deductions or business-expense deductions. The complaint also alleges that Rangel prepares returns that claim improper tax credits, such as the Earned Income Tax Credit (EITC), fails to create or retain accurate "due diligence" documentation for EITC claims, and does not sign and provide his identification number on all returns he prepares. Most of Rangel's customers allegedly reside in southern Texas.

In one instance described in the complaint, Rangel allegedly claimed farming-expense deductions on three tax returns for a married couple who did not own a farming business and never provided any farm-expense documentation to Rangel. The lawsuit also alleges that Rangel claimed improper tax credits on his own income tax returns for 2008 through 2010, and that the IRS assessed accuracy-related penalties against him with respect to those returns.

The complaint further alleges that 96 percent of the returns examined by the IRS, which Rangel had prepared from the 2003 through 2012 tax-filing seasons, were found to have understated the tax liabilities of Rangel's customers. According to the complaint, the IRS estimates that the total tax harm from Rangel's unlawful tax-preparation activities during that period could be over $15 million.

Assistant Attorney General for the Tax Division and US Attorney for the Northern District of California announced October 31 that Noemi Rubio Baez of Salinas, California, pleaded guilty to conspiracy to file false claims for tax refunds with the IRS and to aggravated identity theft.

According to the plea agreement, beginning around February 28, 2008, and continuing through April 16, 2012, Baez and a coconspirator participated in a scheme to obtain and to help others obtain false claims from the IRS by electronically filing in her own name, and in the names of others, false federal income tax returns. Baez and her coconspirator created false income information in the names and Social Security numbers of multiple individuals, and filed materially false tax returns with the IRS claiming refunds derived from tax credits, including the EITC, the Additional Child Tax Credit, and the Making Work Pay Credit.

According to court documents, in some instances, the taxpayers requested the returns be prepared, and in others, the taxpayers did not provide Baez or her coconspirator with their personal identification information and were unaware that the returns had been filed in their names. Baez and her coconspirator filed more than 150 false and fraudulent claims unlawfully seeking more than $400,000 in tax refunds.

At the time of her sentencing, scheduled for January 23, 2014, Baez faces a maximum penalty of twelve years in prison, three years of supervised release, and a fine of $500,000.

Source: US Attorney's Office – California

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Former Orthodontist Convicted of Tax and Fraud Charges

A federal jury in Albany, New York, returned its verdict October 21 convicting Glenn Richard Unger of Ogdensburg, New York, of obstructing and impeding the IRS, filing false claims against the United States, tax evasion, and passing fictitious obligations.

The evidence at trial showed that between 2007 and 2011, Unger filed fourteen false tax returns claiming that he earned substantial income reported, had substantial withholdings on that income, and was entitled to $36 million in tax refunds. Despite numerous warning letters from the IRS that his returns were frivolous, he continued filing false tax returns.

In addition to obstructing the IRS by filing false and fraudulent claims for refund, the evidence at trial also showed that Unger attempted to evade payment of taxes he owed to the IRS. During 2004 and 2005, Unger earned income and failed to file tax returns reporting that income. The IRS assessed taxes for those two years and also assessed penalties for filing frivolous tax returns.

After the IRS filed a tax lien against him, Unger attempted to file a false document with the Saratoga County Clerk's office attempting to release the lien. Evidence at trial also showed that Unger tried to pay off a debt to another orthodontist with a fictitious document purported to be worth $200,000.00.

As a result of the convictions, the defendant is facing a total statutory maximum term of imprisonment of twenty-five years and a maximum fine of $250,000.00.

Source: US Attorney's Office – New York

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Tax Return Preparer Pleads Guilty to Tax Fraud

Amberula Levitt pleaded guilty October 29 to two counts of filing false personal tax returns for the 2004 and 2005 tax years.

According to the charges and other information presented in court, from 2004 through 2010, Levitt owned and operated Tax Time Tax Service (Tax Time), a tax preparation business with multiple locations throughout metro Atlanta. Levitt fraudulently underreported the earnings from Tax Time on her personal tax returns. For the years 2004 through 2009, Levitt owes approximately $620,000 in back taxes to the IRS.

The charges for filing a false tax return in this case carry a maximum sentence of three years in prison and a fine of up to $250,000 on each count. Sentencing is scheduled for January 23, 2014.